Australia's emissions-trading row

Cap, trade and block

A climate-change election looms

KEVIN RUDD, Australia's prime minister, has much political capital riding on his promise to tackle climate change. It helped him win power in 2007. He calls it “the great moral challenge of our generation”. His Labor government's planned cap-and-trade scheme for carbon emissions is designed to force Australians to change the way they use energy. Mr Rudd was banking on Parliament's approving it in time to give him clout at the Copenhagen climate talks that start on December 7th. Australia accounts for almost 1.5% of global greenhouse-gas emissions; but its reliance on coal (also its biggest export by volume) for most of its electricity helps to make it one of the highest emitters per person. But on December 2nd Parliament rejected his scheme. This did more than dash Mr Rudd's hopes of leading the world on climate-change reform. It set Australia up for a possible early election on the issue.

The upset was triggered by two weeks of turmoil in the conservative Liberal Party, the main member of the opposition coalition. Having passed the lower house of Parliament, the climate legislation was stuck in the Senate, the upper house, where the government lacks a majority. In August an unlikely alliance of Greens (who thought the scheme too weak), the coalition and two independents rejected it. Malcolm Turnbull, the Liberal leader, then persuaded his party to strike a deal with the government to make the scheme more business-friendly. To start in 2011, it set targets to cut carbon emissions by 5% of 2000 levels by 2020, or 25% depending on post-Copenhagen global action.

Mr Turnbull had long championed such a scheme. His deal secured an extra A$7 billion ($6.4 billion) in sweeteners over ten years for coal-fired electricity generators and high carbon-emitting industries. It excluded agriculture altogether. But even this was too much for the Liberals' climate-change sceptics, led by Nick Minchin, the party's Senate leader. He recently dismissed action against climate change as an extreme-left plot to “deindustrialise the Western world” after the collapse of communism. Just as Senate Liberals were preparing to pass the climate bill, Mr Minchin and several other sceptics revolted. On December 1st Liberal members of both houses unseated Mr Turnbull and replaced him as party leader with Tony Abbott, one of the prime sceptics.

Mr Abbott beat Mr Turnbull by just one vote. But he quickly killed any commitment to the compromise and resolved to kill the bill in the Senate. Two Liberals, nonetheless, defied their new leader and tried vainly to save it by voting with the government. One, Judith Troeth, told the chamber of her rural experience: “Droughts are longer. Rainfall has dropped…I believe there is global warming.”

More broadly, the fight was over the Liberal Party's future direction. Mr Turnbull's liberal views on social issues, and status as a former leader of Australia's republican movement, grated with party traditionalists. He lasted as leader just 15 months. At 52, Mr Abbott inherits the Liberals' conservative mantle from John Howard, the former prime minister who ignored climate change for most of his 11 years in power. Mr Abbott opposes abortion, stem-cell research and gay marriage. He once called the notion of human-induced climate change “crap”. He now excuses that as hyperbole; but he has stripped the Liberals of any credible stand on the issue.

The defeat has flummoxed business and mining leaders, who were preparing for the higher costs of a carbon-trading economy. The Australian Industry Group, a big business lobby, had endorsed the Rudd-Turnbull deal days before its demise. John Connor, head of the Climate Institute, a Sydney research body, says Australia now risks becoming a “carbon backwater”. Mr Rudd still seems determined to get his scheme into law before an election due in late 2010. The bill's second Senate defeat gives him the constitutional option of calling one earlier. Before he does that, the government will take the unusual step of proposing the bill a third time, in February. Mr Abbott, his party's third leader in two years, says he is not frightened of a climate-change election. Mr Turnbull frets aloud that it could wipe the Liberals out.